Ooma Inc Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Josh Nichols - B. Riley Securities - Analyst : Yes, thanks for taking my question. Good to see some of the large partnerships announced for this quarter as well as the improving cash flow and margins. I'm just kind of curious on the 2600Hz. It seems initially when you made that acquisition expectations seem like relatively low, but you REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 10:00PM, OOMA.N - Q3 2025 Ooma Inc Earnings Call become increasingly optimistic about some of the long-term potential for that. I'm just kind of curious if you could kind of comment a little bit about what you're seeing in the market dynamics, and any benefit potentially from the planned sunset of Microsoft's - Metaswitch on that front?

Question: Josh Nichols - B. Riley Securities - Analyst : Thanks. And then last question from me, you mentioned in your comments and then in the release about you're seeing some increased operating leverage. And then last quarter, I did notice you took up your medium term EBITDA margin targets. Based on the implied outlook for 4Q, you should be 9% plus EBITDA margin. I know you're not giving formal guidance, but fair to assume that you could potentially get to 10% plus maybe or something like that for the full year, based on what you're seeing in business and some of the comments you've already made? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 10:00PM, OOMA.N - Q3 2025 Ooma Inc Earnings Call

Question: Josh Nichols - B. Riley Securities - Analyst : Thanks for the context. Appreciate it. I'll hop back in the queue.

Question: Mike Latimore - Northland Securities - Analyst : Great, thanks. Yes, congrats on the strong cash flow and new wins here. Just want to clarify, on AirDial in the second quarter, you said AirDial had a record bookings. Is it fair to say in third quarter you had higher bookings in the second quarter?

Question: Mike Latimore - Northland Securities - Analyst : Okay. Got it. And then you talked about obviously, this improving margin dynamic. Does that assume that the revenue growth rate kind of remains where it is, sort of implied in the fourth quarter. Or does that assume some improvement in the revenue growth rate? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 10:00PM, OOMA.N - Q3 2025 Ooma Inc Earnings Call

Question: Mike Latimore - Northland Securities - Analyst : Yes. Okay. And then just on the, you said that there's a little more churn in the fourth quarter for IWG. Is it pretty definitive that that will be the end of this enhanced churn, or is there something that could kind of go into '26?

Question: Mike Latimore - Northland Securities - Analyst : All right, great. Thank you.

Question: Eric Martinuzzi - Lake Street Capital Markets - Analyst : Yes, I wanted to pick apart the Q4 revenue guide just one layer further. Is there - can you quantify the impact of the IWG runoff? In other words, the midpoint guide is 5.1% organic growth. What would that be in the absence of or adjusted for IWG?

Question: Eric Martinuzzi - Lake Street Capital Markets - Analyst : Okay. All right. And then the disruption delay. Congratulations on the Frontier actually being able to name the customer. You did talk about, with the acquisition by Verizon, we do have this disruption delay. How long versus what was the prior expectation, and what do you guys kind of spitballing as the potential delay here, in the ramp up with the Frontier relationship?

Question: Eric Martinuzzi - Lake Street Capital Markets - Analyst : Thank you.

Question: Chris Basquill - William Blair - Analyst : Hi, this is Chris on for Arjun and thanks for taking my question. I want to echo about some of the earlier congrats on a solid quarter. So it's good to see you're having some record cash flow coming in. And now with the debt completely paid off and behind you, are there any changes in terms of how we should think about capital allocation going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 10:00PM, OOMA.N - Q3 2025 Ooma Inc Earnings Call

Question: Chris Basquill - William Blair - Analyst : Got it. Thank you. That's all very helpful color. And then, one other question in terms of the IWG trend. That largely being behind us, at least what you have anticipated throughout this year, kind of going into the fourth quarter. Do you expect to see NRR inflict up in the back half of fiscal '26 back to sort of the 100 level or above?

Question: Chris Basquill - William Blair - Analyst : I was just talking about net retention. I think we saw it kind of pick up last quarter when you had lighter than expected of seat sharing from IWG. And so, I was just wondering as we move past the anticipated churn, if you were expecting to see, or as we lap at the churn that we saw this year, if you would expect net retention to inflect sort of back to that 100% level or --?

Question: Chris Basquill - William Blair - Analyst : Yes.

Question: Chris Basquill - William Blair - Analyst : Great. Thanks for taking my questions.

Question: Matthew Harrigan - The Benchmark Company LLC - Analyst : Thank you. As far as the two national cable companies who I'll refer to as Thing 1 or Thing 2, I'm not sure which one it is, but I have a suspicion, but as you know, they pretty much do everything in tandem, in terms of the technology roadmap and the product bouquet. I don't know whether you've ever been to the SCTE Cable Engineering Show, but it adds pretty much a bit of a, me too phenomenon. When they talk about their technology strategies. Are you already in discussions with whichever one you didn't do an arrangement with? And I assume at the very least it would accelerate the RFP process given the reciprocal confidence they would have in each other's due diligence process. And then secondly, I think on the last call you expressed fair confidence on double-digit EBITDA growth over the next couple of years. Are these deals kind of incremental to that, or was it already wired into a certain extent? And I'll follow everyone else and congratulate you on all the developments? Thanks.

Question: Matthew Harrigan - The Benchmark Company LLC - Analyst : And presumably you're looking hard at Europe on AirDial as well, even though North America is the first priority.

Question: Matthew Harrigan - The Benchmark Company LLC - Analyst : But you'd have to do some retinkering on account of some of the electrical regulations over there presumably? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 10:00PM, OOMA.N - Q3 2025 Ooma Inc Earnings Call

Question: Matthew Harrigan - The Benchmark Company LLC - Analyst : Thanks, Eric. Happy Holidays.

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : Hi, great. Thanks so much for taking my question. I know it's hard to predict, Eric. In terms of AirDial, you've announced several partners that sound very bullish. They own their own copper line, so they should be motivated. It even sounds like they're trying to move quickly in the first quarter, one of them. And then you talked about the recent press and the market heating up. So how should investors think about what this means in fiscal '26? Is it in terms of bookings, revenue, some measure of progress? I guess when do you think AirDial will be more impactful, catalyst the P&L?

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : Yes. But given your answer to the ramp, it's not going to be the first half of fiscal '26. It's more likely to be the second half. Is that right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 10:00PM, OOMA.N - Q3 2025 Ooma Inc Earnings Call

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : I'm sure we've asked this in the past, but for 100 lines on the Enterprise and for 10,000 lines on residential, what's the market opportunity for AirDial on a partner like that?

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : You've engaged --?

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : But 100,000 lines equates. If they all converted, there's no loss of lines. For example, 100,000 lines on a rough basis adds what kind of revenue?

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : Great. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 10:00PM, OOMA.N - Q3 2025 Ooma Inc Earnings Call